UK complaints body accused of bias in favour of banks

LONDON (Reuters) - Britain's public body for handling complaints about banks must show it has dealt with customers properly or review their cases, a senior British lawmaker said on Tuesday.

Nicky Morgan, chair of parliament's powerful Treasury Select Committee has asked the Financial Ombudsman Service (FOS) to comment by March 27 on allegations made by Britain's Channel 4 television that some complaints were not properly handled.

Based on reporting by an undercover journalist working at FOS, Channel 4's Dispatches programme appeared to show staff without adequate training siding with banks in some cases having not read the complaints properly.

FOS deals with complaints that customers have failed to resolve with directly with the banks and other financial firms. On average, it upholds about half of all complaints.

"Does the FOS have the ability to reopen cases that it feels may not have been decided correctly?" Morgan said in a letter to FOS Chief Executive Caroline Wayman, in which she also asked for the number of people "affected by alleged errors or improper handling of cases".

FOS said the programme gave an unfair impression, adding that every day it had to make difficult judgement calls.

"It's always important to know where improvements can be made. A review, overseen by the non-executive board, of the concerns raised in the programme will be undertaken," FOS said.

In recent years, FOS has been inundated with complaints about the misselling of payment protection insurance (PPI), with the total amount of funds spent to redress complaints nearing 30 billion pounds, making it Britain's biggest financial scandal.

(Reporting by Huw Jones; Editing by Edmund Blair)